SOCIAL CREDIT

Wanganui Chronicle, Volume 79, Issue 277, 25 November 1935, Page 12

SOCIAL CREDIT

Sir, —We thank “Stability” for his courteous reply to our letter of the 9th. inst., the latter half of which you deleted without referring to the fact. All the points raised by “Stability” have been dealt with again and again, and it is rabher unfortunate that we should be obliged to occupy your space in the repetition of previous statements. “Stability” uses three main arguments in his attempt to counter the new' economics , namely; (1) That Social Credit would cause inflation of the currency, (2) that no shortage of purchasing power exists, and (3) that the velocity plays as important part in creating purchasing power. With reference to (1): “Stability” affirms that what Douglas proposes to do would cause another slump, but as he does not attempt to prove his assertion the statement could be rejected without comment. It is worthy of note, however, that slumps and booms, as we experience them at present, ere the direct result of increasing and diminishing the money supply without controlling the price-levels—operations that will continue to be the normal feature in our economy as long as money is controlled by a private monopoly, and is operated quite distinct 1 from the people's capacity to produce and consume goods. Under Social Credit there will not be independent control of the ticket system. The ticket, or money, system will be definitely anchored to goods; that is to say, it will be an accurate reflection of goods (and services) —the shadow of the substance. That being so how could there possibly be periodical oscillations in the country’s wealth, as w'cll as inflation of the currency? Our standard of living will gradually increase as new scientific processes are applied to production, and we will not be plunged every now and then into a state of semi-barbarism through an artificial money shortage, in designing Social Credit, Mayor Douglas, whom many people now regard as the greatest economist in the world, specially incorporated the just price discount to prevent inflation. His plan is mathematically correct and will operate on a scientific basis, unlike the present hit-and-miss methods of “sound finance.” Even the just price discount will not be set arbitrarily—the physical facts of production and consumption will determine what it shall ue from time to time. (2) If “{Stability” were to personally tell any one of the millions of unemployed throughout the world that tihere is a sufficiency of purchasing power we believe that his life would be in peril. He says there is sufficient purchasing power in the community. Yet on the other hand we have unmistakable evidence of poverty and distress. Does he really think people are suffering poverty and distress for the mere fun of doing it? His statement is clearly contradictory. If one person has insufficient money to buy the necessaries of life there is a shortage of purchasing power, providing, of course, the goods are available for purchase. Certainly there is a very serious mal-distribution of wealth throughout the world (it has been said that 5 per cent, of the ‘people in certain countries ..own 90 per cent, of the assets), but even the re-distribution of wealth would not eliminate the fundamental flaw in our economy —the fact that the present financial system is not seif-liquidating. It is not the purpose of {Social Credit to take wealth from anyone, although the present banking system appears to have a different outlook. A person could still be a miliianaire in. the new {State, which we believe is almost upon us, but his wealth would not be accumulated at the expense of anyone else. (3) We thought the old hag, money velocity, was cremated long ago. If purchasing power can be expanded by increasing the velocity of money then our prosperity would c-nly be limited, as a prominent business man in Wanganui naively put it, by our ability to race to and fro in carrying out our financial transactions. The crux of the matter is, of course, that no matter how quickly we may spend our wages and salaries, the fact of our doing so will not add one cent to the amount of money we have available for spending. We find it difficult to imagine, for instance, “Stability” jostling people off the footpath in his haste to reach the mercers so that by buying his new hat quickly—making the money spin—the cash which normally buys one bat will purchase two instead! While £1 of money, in its journey through the community, might “exchange” £1990 worth of goods, it will cancel only £1 of “costs.” The velocity theory of money, as it is said to affect purchasing power, is, therefore, a complete and major fallacy. “Stability’s” statement that oscillations in industry must be accepted as a concomitant of the private properly regime is quite wrong. Such oscillations are certainly the concomitant of the private credit monopoly, but we are now living in an enlightened age and are capable of managing our affairs more efficiently. Of equal absurbity is the statement that the war was tine cause of our economic difficulties. That is net so. The war was merely the result of the present inept economic system, just as the war clouds which now hang over the nations of the world like a pall are the inevitable outworking of the same system. —We are, etc., WANGANUI DISTRICT COUNCIL. (Douglas Social Credit Movement’ of New Zealand.) 21/11/35.